L-3 acquires Luton, U.K.-based MacDonald Humfrey

L-3 Communications reported the acquisition of MacDonald Humfrey (Automation) located in Luton, U.K. The acquisition was completed November 23, for a purchase price of approximately £224m (approximately US$280m). The purchase price is subject to an upward adjustment of up to £30m (approximately US$37.5m), based on MacDonald Humfrey’s post-acquisition performance for years ending December 31, 2017 to 2019, which would be payable in 2020. The acquisition was funded initially from revolving credit borrowings expected to be repaid before the end of December 2016 from free cash flow. MacDonald Humfrey will report to the L-3 Security & Detection Systems (L-3 SDS) division of the company’s Electronic Systems business segment and will operate under the L-3 MacDonald Humfrey name. L-3 MacDonald Humfrey is projected to generate sales of approximately US$135m (£108m) for the year ending December 31, 2017, and be accretive to earnings. The purchase price represents a multiple of approximately 10 times the business’s estimated 2017 earnings before interest, taxes and depreciation and amortization (EBITDA).